The respondent brings this action against the makers of the following promissory note :
“ Helena, Mon., September 1, 1873.
“ $745^%. Nine months after date, for value received, we promise to pay to the order of Robert 8. Hale the sum of seven hundred forty-five and dollars, negotiable and payable at his business house at the city of Helena, M. T., without default or discount, with two per cent interest per month from maturity until paid, both before and after judgment.
“E. E. BYWATERS,
“ J. F. FORBIS.”
The complaint alleges that the interest had been paid to November 1, 1874; and that the respondent then agreed that the rate of interest should be reduced to one and one-half per cent per month from November 1, 1874, until the payment of the note. During the pendency of this action, Bywaters was adjudged a bankrupt and his assignee paid, August 15, 1876, on account of the note, $246.55. The following memorandum was indorsed upon the note, November 1, 1874: “In consideration of further time being granted, I agree to pay one and' one-half per cent interest per month on the within note until paid.
“E. E. BYWATERS.
“ November 1, 1874.”
Jorbis died before the trial, and his administratrix, the appellant, was made a party defendant. Upon the trial she offered testimony tending to prove the allegations of the answer of Forbis, but the court excluded it. The jury were instructed that the agreement, which was indorsed upon the note, was void for want- of consideration, and its failure to fix a certain period of time for the payment of the note and interest; and that the appellant, or the estate of Forbis, had not been released from liability on the note. Judgment was entered on the verdict for Hale.
How were the rights of Forbis affected by the memorandum of Bywaters upon the note. This note was payable June 1, 1874, and the facts which are set forth in the answer of Forbis Occurred five months afterward. The written agreement does not extend the time of payment for a definite space of time, and does not restrict some rights of the parties to the note. As soon as it was signed, Bywaters and Forbis could tender the amount remaining unpaid on the note and demand its surrender or cancellation, and Hale, the payee, was not prohibited from commencing an action to enforce its payment. “ To discharge the surety, the contract for new credit must be such as will prevent the holder of the note from bringing an action against the principal.” Blackstone Bank v. Hill, 10 Pick. 129; Oxford Bank v. Lewis, 8 id. 458. “ The .indulgence, to have the effect of discharging the surety, must be for a definite time.” 1 Pars, on Notes and Bills, 240, and cases there cited; 2 Dank on Neg. Inst., § 1319.
W e think it is clear that the memorandum of By waters did
The other question for our investigation relates to the consideration of the agreement of Bywaters and the respondent. By the terms of the note, Bywaters and Forbis promised to pay interest at the rate of two per cent per month until paid, “ both before and after judgment.” On November 1,1874, according to the agreement of Bywaters and the respondent. Bywaters promised to pay interest at the rate of one and one-half per cent per month “until paid.” Most of the cases and authorities, to which our' attention has been invited, interpret contracts which were entered into by the parties before the note became due, and we are inclined to deny their applicability to the case at bar, in which the agreement was made five months after the note was payable. But waiving this consideration, and placing the appellant in the most favorable situation, we intend to assume, in our treatment of this subject, that Bywaters and the respondent entered into this contract on or about June 1, 1874. The following rule is undoubtedly sound. If there was a sufficient consideration for the prom
Upon this matter the decisions are conflicting, and we desire to apply the best principle that can be found in the books. The classes of consideration, which appear in the reports, comprise promises to pay the same rate of interest which is mentioned in the note; or interest in .excess of that specified in the note ; or interest in advance for a certain time; or a certain sum in addition to the interest; and also promises to perform work or deliver goods besides the payment of the interest. In the limited number of authorities at our command we have not observed a case in which the maker and payee made an agreement for the payment of interest at a rate below that named in the note.
In Oxford Bank v. Lewis, 8 Pick. 458, a promissory note was signed by two persons, as the principals, and two sureties, and, after the note was overdue, the principals paid in advance the same rate of interest for sixty days. The court held that the receiving of this interest did not disable the owner and holder from bringing an action on the note at any time, and that the sureties were not discharged. The courts of Massachusetts have adhered to this doctrine.
In Reynolds v. Ward, 5 Wend. 501, it is held that a promise by the maker of a promissory note to pay the interest during the time the creditor did not enforce its collection forms no consideration for the agreement to enlarge the period for its payment when the debtor was compelled to pay the interest. In the opinion, Mr. Justice Maeoy says; “It was said on the argument that there was an obligatory act in this case by which the plaintiff was bound to delay ; that there was a consideration for the promise to forbear. What was that consideration ? The promise by Plumb (the maker) to pay interest on the debt so long as the plaintiff should delay. This was a promise to do precisely what he was bound to do without a promise. If the debtor’s promise to pay interest creates no additional obligation, it is no consideration for a contract to delay.” In support of these views the court refers to the following authorities; Pabodie v. King, 12
In Abel v. Alexander, supra, the authorities are reviewed, and the court holds that an agreement by the principal to continue to pay the same rate of interest specified in a promissory note, which- is higher than the legal rate, is not a sufficient consideration to sustain a promise to extend the time of payment, and that such an agreement does not discharge the surety. In Hunt v. Postlewait, 28 Iowa, 427, it is held that forbearance given to the principal in a promissory note after the same became due,
We do not deem it necessary to review the cases which state different rules from those that have been laid down. At the time when Bywaters entered into the contract with the respondent, he was bound to pay, under the statutes of the Territory, interest at the rate of two per cent per month during the time of forbearance, which has been defined. If this contract had provided for the payment of the same rate of interest, it would be without a sufficient consideration, and the surety would be discharged. We know of no legal reason for the omission to apply the same principle to the case at bar, in which Bywaters promised to pay a lower rate of interest than the law required. The agreement of Bywaters and the respondent; was nudum gaetum, but the respondent in the complaint does not demand interest in excess of the rate of one and one-half per cent per month, and the judgment is consistent therewith.